For
companies with long-term marketing plans in India, the "consumers"
(urban + rural), "climbers" (urban only) and "aspirants"
(urban only) classes can be clubbed together to give a market size
of around 57 million households (as at 1995-96) which can be said
to be the "prime segment" of the Indian consumer market.

Formulate
your consumer product marketing strategy on an area-by-area basis
rather than on an all-India basis.

This
report is intended to assist consumerproduct companies in
identifying a plausible market size for their product/s in India.
The table below should be viewed in conjunction with the text that
follows.

India's consuming class

Table
I
Estimated households by annual income

Table
II
Structure of the Indian consumer market (1995-96)

Annual
income (in Rupees) at 1994-95 prices

No.
of households (in million)

Annual
income
(in Rupees) at 1994-95 prices

Classification

Number
of households (in million)

Urban

Rural

Total

<25,000

80.7

<16,000

Destitutes

5.3

27.7

33.0

25,001-50,000

50.4

16,001-22,000

Aspirants

7.1

36.9

44.0

50,001-77,000

19.7

22,001-45,000

Climbers

16.8

37.3

54.1

77,001-106,000

8.2

45,001-215,000

Consumers

16.6

15.9

32.5

>106,000

5.8

>215,000

The
rich

0.8

0.4

1.2

Total
no. of households: 164.9 million

Total
no. of households

46.6

118.2

164.8

Source:
National Council of Applied Economic Research (NCAER). The above
presentation has been slightly modified by IndiaOneStop.Com

Data on income distribution of households is insufficient in determining market size for
different consumer products in India. This is because of the lack of homogeneity of the
consuming class and the varying prices of a single product in different parts of India.
For example, vegetables generally cost more in Mumbai than in Calcutta, hence
vegetable-purchasing power for identical income groups would be different in the two
places even though they are the two biggest cities in India with comparable populations.
In other words, purchasing power is location-specific, not
income specific. Consumption habits of households are therefore better
determinants of consumer market size than income distribution. Of course, other factors
are also to be considered and they are detailed below.

While determining market size for a consumer product, the structure of the
consuming class as seen in Table II above, can be both revealing as well as misleading
depending on the kind of product. For example, any specific consuming class would be fit
to be a market for consumer products like tea or soap, but a product such as vacuum
cleaners would find market largely only in the "consumers" and "rich"
segments of the market as defined in Table II above. Furthermore, even this may not be
correct, because a taste for a vacuum cleaner is not necessarily a function of purchasing
power but of culture and/or taste as well.

Identifying a plausible market size for a consumer product is therefore a hazardous task
in a heterogeneous country like India. Yet, the marketer needs some data to come as close
to the real picture as possible. For this purpose, it can be cautiously assumed that
purchasing power is proportional to income despite variables such as location, taste etc.
Companies are therefore advised to plan their consumer product marketing
strategies on an area-by-area basis, rather than on an all-India basis.

Income data is insufficient. Therefore, it must be supplemented by product-specific
information regarding its existing stock in the marketplace (in the case of consumer
durables) and existing rate of purchases.

It is also advisable to further refine the plausible market size by taking into account
details based on social, cultural and demographic factors.

Marketing a super-premium product such as a Rolex watch is relatively easy. Just go for
the income class above Rs. 106,000 per annum (in 1995-96) as per Table I above. This
class, Table I shows, comprises 5.8 million households. But the problem lies in the fact
that the 5.8 million households are spread all over India.

The prime market for consumer products in India is aware of the cost-benefit, or value
for money, aspect. Their convept of value incorporates socio-cultural benefits in addition
to product utility. For example, many households in the "consumers" class and
the "rich" class (as defined Table II) may have two television sets, but both
the sets may not be top-of-the-line. Thus, while they may be demand for an additional TV
set in many households in the two mentioned classes, it must not be mistaken as demand for
the higher priced TV models. The prime consumer market in India therefore is not a market
for absolute premium products, but for something between the "high end popular
brands" to the "premium brands."

The class described in the previous paragraph is actually the "consumers"
class defined in Table II. This class comprises 33.5 million households as at
1995-96 and it owned and 'consumed' most of the expensive consumer products such as
refrigerators and washing machines as well as premium expendables. At 1994-95 prices,
their annual household incomes ranged between Rs. 45,000 and Rs. 215,000 (to calculate the
latest income statistics, use an annual inflator of 5 per cent). In addition to this
class, the "climbers" and "aspirant" classes (defined in the Table II)
totaling 23.9 million households in urban India, also have the socio-cultural traits of
the "consumers" class and, with time, will join the consumers class.
Medium-to-long-term marketing strategy must therefore aim at the aspirants and the
climbers as well. This is based on the safe assumption that, except for the destitute
class as defined in Table II, the other classes are on the way to the next higher class.
For companies with long-term marketing plans in India, the "consumers" (urban +
rural), "climbers" (urban only) and "aspirants" (urban only) classes
can be clubbed together to give a market size of around 57 million households which can be
said to be the "prime segment" of the Indian consumer market. This becomes even
more true as consumer financing and the credit card culture picks up. Fine-tuning between
the classes is of course important, as explained in the next paragraph.

Suppose you are marketing washing machines. Go for two broad types: fully automatic and
semi-automatic. Target the fully automatic machines at the "consumers"
class and the semi-automatic at the "aspirant" class; the
"climbers" class will then overlap the market for both the types of washing
machines.

All of the above may be confusing, but the marketing strategist has to live with it
because that's how the Indian consumer market is in reality. There is hardly a
characteristic that applies across the market. Hence, the term "Indian consumer
market" is a misnomer: it would be more accurate to describe it as a collection of different
consumer markets.